Question for attorneys (or anyone else who can help)

Meery82 · March 2014

My place of employment recently signed everyone up for a retirement fund where they take 3% out of every paycheck. I opt out of benefits so even though they took my money, I get none of the perks, such as them matching the amount. So I called and told them that I no longer wanted to contribute and that I wanted the money they took out of my last check refunded to me. They came back and said they sent out a letter telling us and giving us the option to call and opt out. I told them that by the time I received the letter, there was no time to opt out before the money was processed out of my check. They even told me that opting out of the contribution takes time to process and it may even remove money from my next paycheck. The only way to be the money is when you leave the company. I told them I never okayed them to remove money, they didn't give me enough notice to opt out in time, and it want my money refunded. They told me no. Is this not completely ridiculous and illegal? What should I do?

snicksnack · March 2014

I have a question just because you opted out of health benefits why are you not elgiable for 401K/retirement matching? They are seperate in my company, also you can opt in and out of 401K at anytime.

jf198400 · March 2014

I know at our work they recently changed to a new retirement plan with the same default 3% for new enrollments. But we had a full month and numerous emails and announcements reminding us to set our contribution or opt out. I agree it's ridiculous that you weren't given any time. I also know that some companies limit changes to retirement contributions to only at the beginning of the quarter, whereas others will let you change at any time, and there pretty much is always a delay of a week or two for it to take effect. Also if this is a 401k plan there will be a penalty if you take the money out. This is dictated by the IRS, so there is nothing your company can do about it. Unfortunately I think you are stuck with it, but having some money saved for retirement isn't the worst thing in the world. I have to say I find it very odd that you were auto enrolled but don't get the company match. Are you sure that's accurate?

FemShep · March 2014

I helped set up a 401(k) plan, so I can share some of those experiences.

-As PP has said, usually health plans and retirement plans are completely separate. Are you sure you're not getting the match?

-It's legal for a company to structure the plan as opt-out, although if run responsibly they should have given you lots of notice in order to opt out. It's also legal for a company to allow changes only once a quarter, or for a company to have a processing time for changes of 2 weeks or more. Keep in mind that your workplace likely contracts with a third party to administer the plan, and may not be able to speed things up at all.

-Even if you don't get the match, having 3% put into a retirement plan can be a good idea. Say, for example, that you're in a 25% tax bracket and you have $100 per pay period taken out. You get $100 in an account, and your paycheck is only $75 less than it was (because that money wasn't taxed). Plus if you make 10% this year on your investment, you finish the year with $110. If you get a match of 50% of your contribution, you'd finish the year with $165-all for $75. That's a good deal. 401(k)s are also often protected in cases of bankruptcy, and while the money isn't easily accessible, there are hardship withdrawals available. Think about it.

Pips09 · March 2014

The pp's covered it pretty well. The short answer is that no, it is not illegal, although they really should have give you ample notice to opt out. And no, they cannot issue you a refund. Once the money is in a qualified retirement plan, the only way to get a distribution (other than a hardship withdrawal) is to wait until you leave the company.

I will also echo that the matching contribution should not be tied to your other benefits. I've never heard of a plan that did that and I think it is likely not allowed. You should double check on that.

Meery82 · March 2014

I did ask about the match up. I would have left it alone if they did. But they specifically told me they don't match for employees who opt out of benefits.

Meery82 · March 2014

FemShep said:

I helped set up a 401(k) plan, so I can share some of those experiences.

-As PP has said, usually health plans and retirement plans are completely separate. Are you sure you're not getting the match?

-It's legal for a company to structure the plan as opt-out, although if run responsibly they should have given you lots of notice in order to opt out. It's also legal for a company to allow changes only once a quarter, or for a company to have a processing time for changes of 2 weeks or more. Keep in mind that your workplace likely contracts with a third party to administer the plan, and may not be able to speed things up at all.

-Even if you don't get the match, having 3% put into a retirement plan can be a good idea. Say, for example, that you're in a 25% tax bracket and you have $100 per pay period taken out. You get $100 in an account, and your paycheck is only $75 less than it was (because that money wasn't taxed). Plus if you make 10% this year on your investment, you finish the year with $110. If you get a match of 50% of your contribution, you'd finish the year with $165-all for $75. That's a good deal. 401(k)s are also often protected in cases of bankruptcy, and while the money isn't easily accessible, there are hardship withdrawals available. Think about it.

That was way too nice of you to give such a helpful and thoughtful response to such a nasty jerk.

Meery82 · March 2014

K3am said:

Meery82 said:
That was way too nice of you to give such a helpful and thoughtful response to such a nasty jerk.

..... hm. Missed something here. Something big.

Whoa, WTF. This was supposed to be on an entirely different post. I don't know how it got over here!

Meery82 · March 2014

K3am said:

I was trying to figure out why you were calling yourself a nasty jerk

I was trying to quote @femshep on the post about the person who wanted to take her newborn twins to work and then blew up when people answered her. Ipad fail.

Going back and reading this, it is pretty funny! LOL

FemShep · March 2014

K3am said:

I was trying to figure out why you were calling yourself a nasty jerk

I was wondering the same thing. @Meery82 you've never struck me as a nasty jerk.

Good luck with your retirement plan issues!

SoMoNY · March 2014

What is so terrible about investing in a 401k?

I didn't realize anyone ever said no to 401k plans.

Meery82 · March 2014

SoMoNY said:

What is so terrible about investing in a 401k?

I didn't realize anyone ever said no to 401k plans.

My husband and I do our own investing.

SoMoNY · March 2014

Meery82 said:

SoMoNY said:

What is so terrible about investing in a 401k?

I didn't realize anyone ever said no to 401k plans.

My husband and I do our own investing.

With pretax dollars?

Meery82 · March 2014

Meery82 said:

SoMoNY said:

What is so terrible about investing in a 401k?

I didn't realize anyone ever said no to 401k plans.

My husband and I do our own investing.

With pretax dollars?

With my husband's money, yes.

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